Workers of BHP Escondida, the world's biggest copper mine, in front of the open pit, in Antofagasta, northern Chile.Ivan Alvarado/Reuters
Workers at BHP Billiton Ltd.’s BHP-N massive Escondida mine in Chile launched a strike on Tuesday after labour negotiations with management collapsed, setting the stage for a potential blow to production at the world’s largest copper mine.
Workers left their jobs at 8 a.m. (1200 GMT) as they demanded a bigger slice of copper profits, which have been buoyed by recent high prices. The union represents about 2,400 people, or most of the mine’s front-line workers.
BHP said it had activated a contingency plan in response to the strike, although it did not provide details. Mines typically have plans to reduce operations without affecting facilities or equipment.
Escondida produced 1.1 million metric tons of copper last year.
The strike, after the union encouraged members in recent weeks to reject BHP’s offer, has stirred up memories of the last major Escondida walkout in 2017, which hit BHP’s copper production and pushed up global prices of the metal, which is used to make wiring and nearly every single electronic device.
Analysts said the market was so far staying calm, with hopes for a quick resolution and weaker demand from top copper consumer China dampening the impact. BHP’s U.S.-listed shares edged down and copper futures were stable.
“The market is taking it in its stride,” said Chris LaFemina, a metals and mining analyst at Jefferies, though he flagged the potential for the strike to encourage other labour disputes in Chile.
“If you get a series of mine disruptions, that can have an impact on the market.”
London-listed shares of BPH and copper prices each fell less than 1 per cent on Tuesday.
Workers from one of three unions at Lundin Mining Corp.’s Caserones copper mine in Chile also went on strike on Tuesday over failed pay negotiations.
While the Escondida strike is unlikely to affect Caserones, the outcome could influence future negotiations at other mines, said Benchmark Mineral Intelligence, a U.K.-based provider of critical minerals pricing and data.
“If BHP workers secure a bonus linked to copper prices, it could set a precedent,” analysts said in written comments to Reuters.
They also noted that Escondida processes 400,000 metric tons of ore a day, a pipeline that could be disrupted shortly after workers walk out.
BHP had offered a US$28,900 bonus per worker, compared with the union’s demand of 1 per cent of shareholder dividends for the mine, which would amount to roughly US$36,000.
“We made every responsible effort to reach an agreement, but that wasn’t possible,” the Escondida labour representatives, known as Union Number 1, said in a statement.
BHP said it had not anticipated a new set of demands from the union at the end of five days of government-mediated talks, and defended its contract as one of the best in the industry.
“The company formulated four proposals responding to each of the points raised by the union, who on the last day of mediation presented new requirements,” BHP said in a statement.
BHP, one of the world’s biggest miners, owns more than half of Escondida in northern Chile, along with Rio Tinto and JECO Corp.
Rio Tinto declined to comment. Representatives for Mitsubishi Corp., the controlling shareholder in JECO, were not immediately available.
Some 60 per cent to 70 per cent of Escondida’s copper concentrates are shipped to China, a source with knowledge of the matter said. A cut-off of Escondida concentrates could hit supply chains of Chinese smelters, which produce half the world’s refined copper.
Union president Patricio Tapia told Reuters previously that a strike would see BHP unable to produce copper, because replacement workers are prohibited by law and the union represents 98.5 per cent of front-line operational workers at Escondida.
The union cited the favourable outlook for copper prices as a reason to press for higher pay, with the metal expected to be in even higher demand for the global energy transition and artificial intelligence applications.
The union is also seeking to improve conditions for workers who lose their jobs due to outsourcing and automation as well as health benefits, bonuses and more.
The union and BHP have repeatedly clashed due to work stoppages, pressure to increase production and complaints about worker safety.